Analysis of Country Road's financial performance Assignment

Analysis of Country Roads financial carrying into action - Assignment ExampleThe company net profitability declined in 2012 as compared to the 2009 whereas the gross profitability increment by a mere 0.7% in 2012 as compared to 2009. This signifies the growing inefficiencies and disabilities in the company to control cost and expenses. Step Three The profitability provided a fall in measure as compared to the profits. This is because the profitability analyses the profits with harm to the growing sales and therefore, helps in measuring the efficiency of the company in dictatorial costs and expenses with the change magnitude sales. (Keiso 1999) Step Four a. Appended figure 3 shows the extended trend analysis on the expenses for the period 2009-2012. b. depreciation and Amortization expenses withstand increase the most over the period. The expense has increased by 57% in 2012 as compared to the expense in 2009. The second most increased expense is the occupancy expense which in creased by 38.4% over the same period. Step Five a. Appended figure 4 shows the vertical analysis performed on the identified items of the income statement. b. Cost of goods sold, employment expense, marketing expenses and other expenses as a percentage of sales deliver decreased over the period 2009-2012 whereas occupancy expense and depreciation and amortization expense as a percentage of sales have increased over the same period. c. The company has been efficient in controlling certain costs and expenses with the increase in sales. The increase in depreciation and amortization is due to increase in total assets. Step Six Over the period, the sales have increased 22.1 percent display im be performance by the company. However, the profit margins have declined because of the increasing expenses over the same period. The company has proved to be inefficient in controlling its administrative and selling expenses which have all increased compared to the stupid year 2009. The company has been holding too much inventory in its warehouses which has increased its management expenses. On the other hand, the company has been prudent in controlling its direct costs which has helped them improve their gross margins. Similarly, this could besides happen due to the accumulated inventory which would be priced lower in the inflationary period. Step sevensome a. Appended figure 5 shows the trend analysis on several balance sheet item totals from 2009-2012. b. This distinctly explains the trend which signifies that the falling ROE is due to the increase in the equity by 26.2 % but with no cumulative effect on the net profits which have been declining during the same time. On the other hand, the assets have increased by 3.3% whereas the earnings before interest and tax have declined over the period again the reason for the falling ROA. c. ROE measures the return to the equity holders- the owners of the company where as ROA measures the ability of the company in using its resources to make profits for the all stakeholders-owners as well as creditors. (Keiso 1999) d. ROA would be considered a better measure by the investors. It is because is measures the returns to all the stakeholders- the owners as well as lenders. Likewise, it also measures the ability of the company in the usage of the resources. It helps in evaluation the management of the company as well. (Keiso 1999) Step Eight a. Appended figure 6 shows the calculations and the ratios. b. The dividend payout ratio